What Happened
The US and Iran have been engaged in a war that has induced global economic shocks, damaged US credibility, and put America's regional allies in a precarious position. Despite attempts at a cease-fire, the conflict continues, with both sides suffering from diminished negotiating leverage and eroding credibility.
The Power Mechanics
The US has repeatedly fallen prey to the sunk cost fallacy, with President Trump acting as if the problem were one of scale or duration. However, the reality is that US negotiating leverage has diminished as the war has progressed, and will likely continue to erode as the US exhausts its munitions and domestic political consequences mount. Iran, on the other hand, has benefited politically by casting itself as the victim of US and Israeli aggression, but the regime was facing existential political and economic challenges before the conflict began.
The Human Cost
The war has had a devastating impact on the people of Iran, with every day of conflict lengthening the road to potential recovery for the regime. The US has also suffered, with damaged credibility and eroding domestic support for the war. The conflict has also put America's regional allies in a difficult position, with new Houthi attacks on Saudi oil exports adding precarity to the war.
The Untold Story
What is being downplayed by both sides is the fact that a protracted war is not good for either the US or Iran. The US has used every form of military, economic, and political pressure available to try to bend Iran to its will, but it has not worked. Pressure has occasionally shaped Iranian decision-making, but only when paired with other tools, such as inducements, coalitions, mutual respect, and patience. The US and Iran need to acknowledge that a war cannot continue indefinitely and that both sides have strong motivations for ending the conflict.
What to Watch
To end the war, the US and Iran must craft a more durable agreement on the Strait of Hormuz that avoids dangerous precedents for freedom of navigation. This will require significant near-term inducements to Iran, such as ending attacks, lifting the blockade, and reissuing General License X. The US should also propose a mechanism under UN auspices that includes Iran, Oman, and a rotating seat for other Gulf countries to monitor traffic through the strait and settle transit disputes. This could provide a way out of the conflict and pave the way for a more comprehensive diplomatic solution.
